WESTCHESTER OPINION

WESTCHESTER OPINION; Carnegie's Legacy Continues To Bear Interest

By Milton Goldin; Milton Goldin is a consultant on fund raising.

Published: June 18, 1989

POSSIBLY the most literate statements on laissez-faire capitalism and charitable giving during America's Gilded Age appeared 100 years ago in the June and December 1889 issues of ''North American Review.'' The author, who is buried in North Tarrytown's Sleepy Hollow Cemetery, was the largest single producer of steel in the world and the man who made philanthropy Big Business in America: Andrew Carnegie.

Carnegie had arrived in America as a penniless Scottish immigrant about 40 years earlier. He knew little about making steel but demonstrated near-genius at finding men who did. A super salesman, he named his first factory in honor of the president of the Pennsylvania Railroad. Thereafter, Edgar B. Thompson was a major customer, helping Carnegie build a $450 million fortune.

Few other Americans proved as enterprising as the slight, feisty industrialist who would not marry until his mother had died and he was past 50. By 1889, the country's national wealth neared $65 billion, more than the wealth of Great Britain or of Russia and Germany combined. But America simmered with discontent and anger. A major reason was that 11 million of its 12 million families lived on average incomes of only $380 a year.

Progressives, populists and farmers placed the blame for this dramatic difference between rich and poor squarely on the robber barons. Although the middle classes admired the robber barons, they conceded that some Government regulation of them might be in order. By 1891 there would be 120 men worth more than $10 million, most of them happily indulging in what Thorstein Veblen called ''conspicuous consumption.''

The threat of civil war between rich and poor mandated a conciliatory statement by a business titan. Carnegie, who nurtured ambitions to be an intellectual, chose himself to speak out.

Capitalism, he observed, had made possible a new world of plenty. He argued that the ''good old times'' cited by critics ''were not good old times'' and a return to them would be ''disastrous.'' Nonetheless, he said ''the problem of our age is the proper administration of wealth.''

How to solve the problem? ''There is but one right mode,'' he wrote in ''The Best Fields for Philanthropy.'' Men of wealth should make gifts during their lifetimes ''to promote the permanent good of the communities'' from which their fortunes ''have been gathered.''

Or, in the sentence that became the essence of his philosophy, ''The man who dies thus rich dies disgraced.''

Progressives agreed that the country needed harmony. Differences between Carnegie and the clerics who took the lead against him stemmed mainly from his fulsome admiration of the rich and his insistence that philanthropy would bring communal peace. The Rev. William Jewett Tucker, professor of religion at Phillips Academy in Andover, Mass., and later president of Dartmouth College, feared the results of unequal distribution of wealth and could ''conceive of no greater mistake, more disastrous in the end to religion if not to society, than that of trying to make charity do the work of justice.''

Tucker missed an important feature of Carnegie's own giving. In 1889, the steel magnate was better at extolling the virtues of charity than at actually contributing. His benefactions thus far had consisted of nothing more than a swimming pool and library for his native Dunfermline, Scotland; a library in the town of Braddock, Pa.; a pipe organ for a Swedenborgian Church that his father had attended; and a five-year pledge for $6,000 to the Western University of Pennsylvania, which later became the University of Pittsburgh.

Nor, despite his humble beginnings, did Carnegie identify with the downtrodden. The same year these two articles appeared, a union entered his Homestead plant. Two years later, Homestead became the scene of a savage confrontation between management and labor.

Meanwhile, the potential givers most affected by his writings would be Carnegie himself and John D. Rockefeller, the country's first billionaire, who lived on a vast estate in Pocantico Hills. Between the publication of the essays and his death 30 years later, in 1919, Carnegie's giving reached spectacular levels: he donated $308 million for libraries, teachers' salaries, pipe organs in churches, and to educational institutions.

An admiring Rockefeller wrote him in 1896, ''I would that more men of wealth were doing as you are doing with your money, but, be assured your example will bear fruits.''

And so it did. John D., his son and his five grandsons had contributed $2.5 billion for universities, health care and a wide variety of other causes by the early 1950's.

But after his largest gifts, a total of $135 million to the Carnegie Corporation of New York beginning in 1911, Carnegie lost interest in philanthropy. He had discovered that a reputation as a benefactor did not enhance his reputation as a thinker - his real goal.

Today, the foundation, which Carnegie perfected as a philanthropic instrument, remains the favored vehicle through which the wealthy channel beneficences. But Carnegie might have been surprised by other developments in giving. He did not view the foundation as a tool to protect capital gains. The sons and daughters of the rich, he believed, should create their own fortunes, and he urged Congress to pass large inheritance taxes.

His general philosophy of giving was more of a matching-grant concept: ''In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so.'' He continued, ''Neither the individual nor the race is improved by almsgiving.''

Probably, Carnegie would not be surprised by the spate of multimillionaires and billionaires in 1989 who own magazines and write articles for them. Malcolm Forbes and Mortimer B. Zuckerman are men he would be able to understand. After all, if you don't have a forum for what you think, what's the point of having the money?